Chief executive officer of Nvidia Corp. said that the graphics chip designer not only completely supports the Federal Trade Commission’s lawsuit against Intel Corp., but also that the legal action will eventually help the evolution of the graphics processing unit (GPU).

Nvidia Proclaims Itself Victim of Intel's Business Conduct

“We support today’s action by the FTC, which has fully recognized Intel’s behavior as an impediment to progress in the computer industry and to consumer choice. As the FTC states, when Intel fell behind in innovation within its core CPU market, it moved to smother competition in the GPU marketplace. This has curbed innovation and investment, and reduced consumer choice,” said Jen-Hsun Huang, chief executive of Nvidia, in a special statement.

It is interesting to note that while FTC did accuse Intel of “smothering potential competition from GPU* chips”, it did not indicate such moves slowed down the innovation and investments made by GPU companies. In fact, the investigation of FTC is focused around Intel’s business practices on the market of central processing units (CPUs), not graphics processing units. FTC did say that Intel’s practices could generally impact the market of GPUs.

Mr. Huang believes that discounts Intel provides to its customers who acquire Intel Atom processors and chipsets in bundles are unfair and undermine Nvidia’s ability to popularize its GeForce 9400M (Ion) core-logic on the growing market of netbooks and nettops. The highly-ranking executive believes that the tactics is both aggressive and anti-competitive. In addition, Intel and Nvidia are in the middle of a legal dispute, which result should determine whether Nvidia can produce and sell chipsets compatible with Intel microprocessors with integrated memory controller that are based on Nehalem, Pineview and, eventually, Sandy Bridge micro-architectures.

Meanwhile, to remedy the anticompetitive damage alleged in the complaint, the FTC is seeking an order which includes provisions that would prevent Intel from using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips.

Even if the FTC wins the case against Intel in court, it will forbid Intel to bundle CPUs with core-logic sets with or without integrated GPUs and/or provide certain discounts. However, future microprocessors by Intel Corp. for mainstream and entry-level markets already contain integrated graphics circuits. As a result, there will hardly be a lot of opportunities for Nvidia on the platform market other than in the form of standalone graphics chips. Nevertheless, Mr. Huang believes that the lawsuit will still do a lot of positive for the market of GPUs.

Graphics Chips Are Becoming Critical

“The GPU is critical for common applications like graphics, video and photo processing. Today’s filing is sorely needed to stop Intel from using unlawful tactics to lock out the GPU and block consumers from its revolutionary benefits,” said Mr. Huang.

Recently Intel admitted the importance of GPU-computing by announcing plans to support video transcoding acceleration with its next-generation integrated graphics processors.

“Today’s FTC announcement highlights the industry-changing impact of the GPU and the importance of our work. Our innovation is making the PC magical and amazing again. I can now imagine the day when Intel can no longer block consumers from enjoying our creation and experience computing in a way we know is possible,” said the head of Nvidia in an alleged internal letter to the employees of the company.

*The FTC does not officially disclose what it means by GPUs. Intel does not produce discrete GPUs. X-bit labs believes that the FTC uses general term GPU to refer to both chipsets with integrated graphics processors (IGPs) and discrete graphics chips since the success of the former limit market opportunities of the latter.